5 Reasons Why Bitcoin is Not a Bubble

by Andrew McGuinness     lip 16, 2019

5 Reasons Why Bitcoin is Not a Bubble

Trading 101 teaches us to avoid bubbles—don’t invest in what everyone else is investing, or else you will suffer the consequences of a bubble popping. But Bitcoin isn’t like traditional stocks, and therefore can’t be viewed under the same rules. The major fear driving people from investing in Bitcoin and other cryptocurrencies is the chance that it may be a bubble; no one wants to throw away money. However, there are several reasons why Bitcoin is not a bubble. For example:

1) Bitcoin Is an Innovation, Not a Stock

Many of the financial and trading experts warning the public about getting into Bitcoin are limited by their expertise: they are certified experts in finance, not technology. They have trouble viewing Bitcoin as anything other than a stock to be traded on the stock market, and therefore they apply the same trading rules to Bitcoin that they do to every other stock.

But Bitcoin is the last thing from a stock in a company. Bitcoin is an innovation, the first of its kind. It possesses its own utility and scarcity, turning it into a stored value. While Bitcoin itself may be too clunky to be used as a currency, its role as the first cryptocurrency to pave the path for more sophisticated cryptocurrencies is guaranteed to keep it on top for the next several years.

2) This Is Only the Beginning of Cryptocurrencies

2017 was a giant year for cryptocurrencies, with popular tokens like Bitcoin, Litecoin, Ether and Ripple climbing several thousand percent in value. Many who are wary about investing in cryptocurrencies now are afraid that this rocket-fueled ride has reached its end, simply because it has already gone so high.

But there are no signs pointing to it slowing down. Bitcoin and cryptocurrency adoption has only just now begun. While Bitcoin itself may not be the main form of cryptocurrency payment in the next few years, it will stay prominent due to its name recognition as other cryptocurrencies further find mass adoption. When the general public understands the benefits of cryptocurrencies, and as more businesses adopt it, the value of crypto markets will only increase.

3) It is Crucial for Countries with Unstable Economies

The beauty of Bitcoin is in its utility and function. Many Bitcoin naysayers will claim that Bitcoin is nothing more than a currency for the black market drug trade, but this is no longer the case. Bitcoin is crucial for people who have no access to traditional banks, as well as those suffering in countries whose economies are experiencing hyperinflation.

For example, in Venezuela, the economy has become so terrible that the Venezuelan central bank only lets people withdraw a maximum of $.5 USD per day. Because of this, many have turned to Bitcoin, as Bitcoin allows their wealth to stay afloat rather than deflate.

4) It Cannot Be Crushed by Outside Effort

Bitcoin may have many naysayers, but this is partly because negative media is the only way those who oppose it can potentially hurt it. Why? Because Bitcoin is decentralized, and therefore isn’t controlled by any single company or entity. Bitcoin exists online and will continue to exist for as long as users believe in it; no manipulation can take place to shut it down.

5) The Supply is Limited

Bitcoin is designed to only release a maximum of 21 million tokens in its lifetime; after that, no further Bitcoin can be mined. 80% of this number has already been generated, and the next 20% aren’t expected to be mined out until the mid 22nd century. This means that for as long as people continue to invest in Bitcoin, its value will only continue to rise, due to its limited nature.

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